The Markets
Investing in September can be like biting into a jelly doughnut and finding boiled cabbage—full of unwelcome surprises.
“History suggests September is the worst month of the year in terms of stock-market performance,” reported Isabel Wang of Morningstar. The Standard & Poor’s (S&P) 500 Index “has generated an average monthly decline of 1.2%…dating back to 1928, according to Dow Jones Market Data.”1
One reason for the sharp stock market decline last week appeared to be concerns that the Federal Reserve may have waited too long to lower rates. During the week, economic data continued to present a mixed picture of the U.S. economy. The employment report released on Friday showed the United States added about 142,000 jobs in August—a significant increase from July—and that average hourly earnings were up 3.8 percent year over year. In addition, the unemployment rate ticked lower to 4.2 percent.2
However, the report wasn’t quite as rosy as those numbers suggest. Fewer jobs were created than economists had predicted and “downward revisions from the two previous months suggest that the labor market is cooling faster than the initial data may indicate,” reported Lauren Kaori Gurley and Rachel Siegel of The Washington Post.3
The information has some pundits speculating that Fed officials may opt for a larger rate cut than originally anticipated at the Fed meeting in September, according to CME FedWatch.4 On Friday, Federal Reserve Governor Christopher Waller said he support a September rate cut and was “open-minded about the size and pace of those reductions,” reported Ann Saphir of Reuters.5
In recent weeks, investors have been feeling quite bullish, according to the AAII Sentiment Survey. During the last two weeks of August, more than 50 percent of survey participants indicated they expected the stock market to rise over the subsequent six months. The level of optimism among survey participants came close to the survey’s all-time high (52.9 percent on December 20, 2023) and remained well above the historical average of 37.5 percent.6
Last week, investor sentiment shifted. Fewer participants were bullish – and fewer participants were bearish.6 The number of respondents who were neutral increased, which means they think stock prices will remain relatively unchanged over the next six months.7
By the end of last week, major U.S. stock indices had moved lower, while bond markets rallied.8 U.S. Treasury yields fell across the yield curve9 and finished the week with the yield on the benchmark 10-year U.S. Treasury above the yield on the 2-year U.S. Treasury for the first time since July 2022, reported Connor Smith of Barron’s.10
When markets are volatile, as they were last week, it’s normal for investors to worry. Before making any changes in response to short-term market fluctuations, remember that historical performance supports the idea that staying invested is a sound way to pursue long-term financial goals. If you have any questions about recent market volatility or your investments, please get in touch.
Data as of 9/6/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -4.3% | 13.4% | 21.1% | 6.2% | 12.7% | 10.5% |
| Dow Jones Global ex-U.S. Index | -2.5 | 6.1 | 12.8 | -2.4 | 3.9 | 1.8 |
| 10-year Treasury Note (yield only) | 3.7 | N/A | 4.3 | 1.4 | 1.6 | 2.5 |
| Gold (per ounce) | -0.3 | 20.6 | 30.4 | 11.2 | 10.5 | 7.1 |
| Bloomberg Commodity Index | -2.5 | -5.0 | -11.9 | -0.7 | 3.8 | -2.8 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
THE STRANGE STORY OF TRANSPARENT MICE. A big challenge for medical and biological researchers is an inability to see inside living creatures. Sophisticated imaging techniques are helpful, but they don’t always provide a clear picture. That may be about to change. Researchers at Stanford University:
“…found that a yellow food dye called tartrazine, used to color everything from M&Ms to Gatorade, can, if applied to the skin of a live mouse, make the tissue transparent. The effect was pronounced enough for researchers to see blood vessels beneath the animal’s scalp, some of its abdominal organs and a number of the more delicate muscles in its legs—sights hitherto only directly visible through dissection. When the dye was washed off, the skin’s natural opacity returned,” reported The Economist.11
Why does yellow food dye make it possible to see through mouse skin? In general, skin is opaque because fats, protein, and water scatter light and prevent it from passing through the skin. Food dyes are great light absorbers. As a result, a combination of tartrazine and water applied to mouse skin helps light travel more directly through the skin, making it transparent.11
The discovery may have a wide variety of applications, according to a source cited by Carolyn Y. Johnson of The Washington Post. The technique could someday help researchers:12
- Observe brain activity;
- Diagnose deep tumors without surgery;
- Locate veins more easily for IVs and blood draws; and
- Make cosmetic procedures (like tattoo removal) more precise.
The lead researcher on the study, which was published in the print issue of the journal Science on September 6, Dr. Zihao Ou told The Economist, “It will take more work before humans are added. As human skin is ten times thicker than that of mice, replicating the tetrazine experiment would require far longer application periods…It is also unclear just how reversible such a process would be.”11
Clearly, there is more work to be done!
Weekly Focus – Think About It
“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”13
—Marcel Proust, novelist
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
2 https://www.bls.gov/news.release/pdf/empsit.pdf
3 https://www.washingtonpost.com/business/2024/09/06/august-jobs-unemployment-labor-market/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_The%20Washington%20Post_3.pdf)
4 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
6 https://www.aaii.com/sentimentsurvey (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_AAII%20Investor%20Sentiment%20Survey_6.pdf)
7 https://www.aaii.com/latest/article/234628-aaii-sentiment-survey-neutral-sentiment-rises
8 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_Barrons_Data_8.pdf)
10 https://www.barrons.com/livecoverage/stock-market-today-090624?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_Barrons_The%20Yield%20Curve%20Finally%20Closed%20Normal_10.pdf)
11 https://www.economist.com/science-and-technology/2024/09/05/a-common-food-dye-can-make-skin-transparent (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_The%20Economist_A%20Common%20Food%20Dye%20Can%20Make%20Skin%20Transparent_11.pdf)
12 https://www.washingtonpost.com/science/2024/09/05/see-through-transparent-mice-food-dye/?_pml=1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-09-24_The%20Washington%20Post_Scientists%20Use%20Food%20Dye%20in%20Doritos%20to%20Make%20See-Through%20Mice_12.pdf)
[1]3 https://www.brainyquote.com/quotes/marcel_proust_107111?src=t_discovery
The Markets
After gyrating wildly throughout the month, major U.S. stock indexes finished August higher.
Despite a lot of uncertainty and some dramatic ups and downs, the Standard & Poor’s (S&P) 500 Index rose 2.3 percent in August, while the Dow Jones Industrial Average gained 1.8 percent to close at a record high. It was the fourth consecutive month of gains for both indexes, reported Connor Smith of Barron’s.1
The month’s most remarkable comeback belonged to the Nasdaq Composite Index which eked out a 0.6 percent gain for the month. “That’s a shocking turnaround, given the Nasdaq entered correction territory early in the month…,” reported Smith.1 (A correction is a decline of at least 10 percent.2)
As sentiment calmed, the CBOE Volatility Index (VIX), which gauges how volatile investors expect the market to be over the next 30 days, moved lower. “Wall Street’s ‘fear gauge’—the VIX—dropped to 15. That’s after an unprecedented spike that took the index above 65 during the Aug. 5 market selloff,” reported Rita Nazareth of Bloomberg.3
Why did investors regain their confidence?
There was some good economic news last week that proved to be just what markets were hoping to see. The data were strong enough to allay fears the economy might weaken too fast, but not so strong they might cause the U.S. Federal Reserve (Fed) to change its mind about lowering the federal funds rate in September. Here’s what happened:
- The economy remains steady. Investors have been worried U.S. economic growth might be slowing more quickly than previously thought. Those concerns were soothed when the Bureau of Economic Analysis revised its estimate for gross domestic product (GDP)—which is the value of all goods and services produced in the U.S. —from April through June.4 “The U.S. economy grew faster than initially thought in the second quarter amid strong consumer spending, while corporate profits rebounded, which should help to sustain the expansion,” reported Lucia Mutikani of Reuters.5
- Inflation continues to soften. On Friday, one of the Fed’s favored inflation gauges—the personal consumption expenditures (PCE) price index—showed headline inflation was 2.5 percent year over year. Core inflation, which excludes volatile food and energy prices, was up 2.6 percent year over year.6 “The soft price growth continues a recent stretch of cooler inflation readings and falls in line with what Fed officials were hoping to see before easing their restrictive monetary-policy stance,” reported Megan Leonhardt of Barron’s.7
Last week, major U.S. stock indices moved higher.1 Yields for U.S Treasuries with shorter maturities moved lower over the week, while yields for longer maturities moved higher.8
Data as of 8/30/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.2% | 18.4% | 25.1% | 7.6% | 14.1% | 10.9% |
| Dow Jones Global ex-U.S. Index | 0.4 | 8.8 | 14.3 | -0.8 | 5.0 | 2.1 |
| 10-year Treasury Note (yield only) | 3.9 | N/A | 4.1 | 1.3 | 1.5 | 2.4 |
| Gold (per ounce) | 0.1 | 20.9 | 29.4 | 11.5 | 10.5 | 6.9 |
| Bloomberg Commodity Index | -0.4 | -2.6 | -9.5 | 0.0 | 4.5 | -2.6 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
WE JUST WANT TO HAVE FUN! When you live a busy and sometimes stressful life, play can be important for your health. Adam Piore of Newsweek reported, “A weighty and growing body of evidence—spanning evolutionary biology, neuroscience and developmental psychology—has in recent years confirmed the centrality of play to human life. Not only is it a crucial part of childhood development and learning but it is also a means for young and old alike to connect with others and a potent way of supercharging creativity and engagement.”9
The idea dovetails with a cultural trend known as “kidulting.” The Economist reported on the rise of kidulting, “…where adults engage in lighthearted activities traditionally designed for children…a giant ball pit for adults in three British cities, welcomes 25,000 visitors each month. Even museums and immersive exhibitions typically aimed at actual children now host adult-only evenings…Enthusiasts say that such spaces heighten creativity, human connection and joy, triggering the pleasure-seeking chemical [dopamine].”10
New museums have popped up to help adults unleash their inner child. For example, the Museum of Ice Cream offers a fun-dae out for adults (children are welcome, too). They can frolic in pools of artificial ice cream sprinkles, engage with themed playscapes, and eat ice cream.11
The WNDR Museum offers a completely different kind of fun. It engages visitors through interactive experiences with installations like The Wisdom Project that asks visitors to answer the question, “What do you know for sure?” and requests that they consider what information is important enough to put out into the world.12 Museum visitors also can use imagination to create AI-generated artwork13 or visit the Quantum Mirror, “an infinity room with over 150 mirrors that touches on our interaction with technology. Our obsession with screens, the way that our self-perception has changed as social media has become more popular in our society.”14
The National Institute for Play cautions that, while play is important for adults, what one person embraces as play may be an annoyance to another.15 Instead of interactive museums, your jam may be a fantasy football league, a book club or a hike in the woods. What do you do just for the fun of it?
Weekly Focus – Think About It
“It’s very important that we re-learn the art of resting and relaxing. Not only does it help prevent the onset of many illnesses that develop through chronic tension and worrying; it allows us to clear our minds, focus, and find creative solutions to problems.”16
–Thich Nhat Hanh, Buddhist monk and author
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.barrons.com/livecoverage/stock-market-today-083024?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Barrons_Dow%20Snags%20Record%20Close%20as%20Index%20Marks%20Fourth%20Monthly%20Gain_1.pdf)
2 https://www.investopedia.com/terms/c/correction.asp
3 https://www.bloomberg.com/news/articles/2024-08-29/stock-market-today-dow-s-p-live-updates (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Bloomberg_S&P%20500%20Spikes%20in%20Last%2010%20Minutes%20of%20US%20Trading_3.pdf)
4 https://www.bea.gov/sites/default/files/2024-08/gdp2q24-2nd.pdf
6 https://www.bea.gov/news/2024/personal-income-and-outlays-july-2024
7 https://www.barrons.com/livecoverage/july-pce-inflation-report-release-today (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Barrons_Dow%20Snags%20Record%20Close%20as%20Index%20Marks%20Fourth%20Monthly%20Gain_1.pdf)
[1]0 https://www.economist.com/culture/2023/08/15/the-rise-of-kidulting (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/09-03-24_Economist_Rise%20of%20Kidulting_10.pdf)
[1]1 https://www.museumoficecream.com
[1]2 https://wndrmuseum.com/installation/the-wisdom-project-boston/
[1]3 https://wndrmuseum.com/installation/untitled-by-you-boston/
[1]4 https://wndrmuseum.com/installation/quantum-mirror/
[1]5 https://nifplay.org/play-for-you/make-play-part-of-an-adult-life/ [1]6https://www.brainyquote.com/quotes/thich_nhat_hanh_531578
The Markets
The near future is more predictable than the distant future.
Last year, the St. Louis Federal Reserve explored the accuracy of recession forecasts. They found that short-term predictions about whether there would be a recession in the subsequent quarter were fairly accurate. However, projections for economic growth a year ahead were far less accurate. The researchers concluded, “Even though forecasts can help, we must live with significant uncertainty about future economic conditions.”1
Investors experienced some of that uncertainty last week as economic data created confusion about the state of the economy. The Department of Labor released its preliminary revision of the employment report, which showed the number of jobs created from March 2023 to March 2024 was significantly lower than previously thought.2
“The new estimates suggest monthly job growth of about 174,000, instead of the roughly 240,000 previously understood…At the end of the day, the revisions imply that the total number of jobs in the U.S. is just 0.5 [percent] smaller than previously thought,” reported Natalie Sherman of BBC News. She cautioned that the preliminary revision will be adjusted again and that, “Over the last four years, the final estimates of job growth have ended up higher than indicated in August.”3
Other figures released last week weren’t particularly helpful. In August, manufacturing data was softer than expected. However, sales of existing homes rose in July as supply increased and interest rates fell, reported Seana Smith and Madison Mills of Yahoo! Finance.4
The Economist also weighed in on the state of the U.S. economy last week. It asked whether America was already in a recession as some rules of thumb have suggested. It concluded:
“Recession rules are based on the premise that once news gets bad enough, it will worsen further. Historically, that has been a decent bet: unemployment shoots up quickly and then falls slowly; central banks tend to raise interest rates until something breaks. Yet today the Federal Reserve has room to ease and, given the unusual labor-market recovery, some bumpiness does not spell disaster. Although America’s gangbusters expansion is calming, a gradual slowdown is not a crash—no matter what the rules say.”5
On Friday, investors were reassured by Federal Reserve Chair Jerome Powell who indicated he is confident “inflation is on a sustainable path back to 2 percent,” and “the time has come for policy to adjust.” Many market watchers interpreted that to mean a rate cut is ahead in September. Major U.S. stock indices finished the week higher, and yields on most maturities of U.S. Treasuries moved lower. 6,7,8
Data as of 8/23/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.5% | 18.1% | 27.0% | 8.0% | 14.6% | 10.9% |
| Dow Jones Global ex-U.S. Index | 2.1 | 8.4 | 16.0 | -0.9 | 5.2 | 2.0 |
| 10-year Treasury Note (yield only) | 3.8 | N/A | 4.2 | 1.3 | 1.5 | 2.4 |
| Gold (per ounce) | 1.0 | 20.8 | 31.0 | 11.7 | 10.8 | 6.9 |
| Bloomberg Commodity Index | 1.0 | -2.2 | -8.6 | 1.2 | 4.9 | -2.6 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
THE SKINNY ON SOCIAL SECURITY. Social Security was a source of income during retirement for 91 percent of current retirees who participated in the Employee Benefit Research Institute (EBRI)’s 2024 Retirement Confidence Survey. Sixty-two percent of participants reported that Social Security was a major source of income. However, both retired and working participants were concerned that significant changes may be ahead.9
They’re not wrong to be concerned. According to the most recent Trustees report, the trust fund that supports Social Security and Medicare will pay 100 percent of scheduled benefits until 2033. After that, benefits are expected to drop by about 21 percent.10
So far, Congress has not been enthusiastic about addressing the issue because many of the solutions being considered are unpalatable to one group of voters or another. Various solutions are being considered, including:
- Raising the official retirement age. Currently, the full retirement age is 67 for anyone born after 1960. Since people are living longer and working longer, one idea under consideration is that full retirement age be pushed back to age 70 for Americans born after 1977, reported Mike Townsend of Schwab.11
- Changing the payroll tax that funds Social Security and Medicare. Under the current system, payroll taxes of 12.4 percent fund retiree benefits. The tax is split between employers and employees. Working people pay 6.2 percent on earnings up to $168,600, and earnings above $168,600 are exempt. One proposal suggests that payroll tax also be assessed on earnings above $400,000, reported Peter Grieve of Money.12
- Investing the trust fund differently. An alternative approach that is being considered is diversifying the Social Security trust fund. “Social Security funds are now 100 percent invested in U.S. Treasury bonds, which are very safe but offer a relatively low rate of return. One idea is to put some portion of Social Security taxes into a newly created sovereign wealth fund that would invest in stocks and have the potential to earn a higher rate of return,” reported Townsend.11
If you have concerns about the future of Social Security and would like to explore other sources of guaranteed retirement income, please get in touch.
Weekly Focus – Think About It
A Time to Talk
by Robert Frost
When a friend calls to me from the road
And slows his horse to a meaning walk,
I don’t stand still and look around
On all the hills I haven’t hoed,
And shout from where I am, What is it?
No, not as there is a time to talk.
I thrust my hoe in the mellow ground,
Blade-end up and five feet tall,
And plod: I go up to the stone wall
For a friendly visit.13
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.stlouisfed.org/on-the-economy/2023/sep/can-economists-predict-recessions
2 https://www.bls.gov/ces/notices/2024/2024-preliminary-benchmark-revision.htm
3 https://www.bbc.com/news/articles/cy4ydqv8721o
4 https://finance.yahoo.com/video/manufacturing-pmi-falls-existing-home-142453232.html
5 https://www.economist.com/finance-and-economics/2024/08/22/is-america-already-in-recession (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-26-24_Economist_Is%20America%20Already%20in%20a%20Recession_5.pdf)
6 https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-26-24_Barrons_Data_6.pdf)
7 https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm
10 https://www.ssa.gov/oact/trsum/
11 https://www.schwab.com/learn/story/future-social-security-and-medicare?cmp=em-XCU
[1]2 https://money.com/proposals-fix-social-security-affect-benefits/ [1]3https://discoverpoetry.com/poems/poems-about-community/
The Markets
The best week of the year?
After two weeks of slow and jolting market performance, a bounty of positive news calmed investors and lifted stock markets higher last week.
“Investors seem to have come to the realization that while the economy may be in fact slowing, the Federal Reserve is going to take action to address that by cutting interest rates on Sept. 18…with a September rate cut a near certainty, the mood in the market has turned on a dime,” reported Paul R. La Monica of Barron’s.1
Here’s what happened:
Inflation continued to move lower. In July, prices rose 2.9 percent year to year, according to the latest Consumer Price Index report. That was an improvement on June’s 3.0 percent increase. The price of gasoline, new and used vehicles, and medical care moved lower, while the cost of shelter, motor vehicle insurance and recreation moved higher.2,3
“It was the first time that the annual pace of inflation was below 3 [percent] since spring of 2021. Even though June’s inflation reading was slightly better, the pricing data from last month will likely help convince Fed officials to cut interest rates by at least a quarter of a percentage point at their next policy meeting in September,” reported Megan Leonhardt of Barron’s.4
Consumer spending remained strong. Consumer spending is the engine that drives the American economy. After slowing (down 0.2 percent) in June, retail sales accelerated (up 1.0 percent) in July, according to the U.S. Commerce Department’s Advance Monthly Sales for Retail and Food Services.5
“The retail sales numbers were a blowout versus consensus [expectations], but more importantly it should lay to rest (at least for the moment) all of the ‘doom and gloom’ that was expressed at the beginning of this month,” said a source cited by Rita Nazareth of Bloomberg.6
Consumer sentiment brightened. In August, for the first time in five months, consumer sentiment improved, according to the University of Michigan’s Consumer Sentiment Survey.7 Joanne Hsu, the Survey of Consumers Director, wrote:
“Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months, consistent with the fact that election developments can influence future expectations but are unlikely to alter current assessments. Survey responses generally incorporate who, at the moment, consumers expect the next president will be. Some consumers note that if their election expectations do not come to pass, their expected trajectory of the economy would be entirely different. Hence, consumer expectations are subject to change as the presidential campaign comes into greater focus, even as consumers expect that inflation—still their top concern—will continue stabilizing.”7
Major U.S. stock indices finished the week higher.8The yield on longer-maturities of U.S. Treasuries moved higher over the week.9
Data as of 8/16/24 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 3.9% | 16.5% | 26.1% | 7.4% | 14.0% | 10.9% |
| Dow Jones Global ex-U.S. Index | 3.6 | 6.2 | 13.2 | -1.5 | 4.9 | 1.9 |
| 10-year Treasury Note (yield only) | 3.9 | N/A | 4.3 | 1.3 | 1.5 | 2.4 |
| Gold (per ounce) | 3.1 | 19.6 | 30.5 | 11.6 | 10.4 | 6.7 |
| Bloomberg Commodity Index | 0.2 | -3.0 | -7.5 | 0.2 | 4.5 | -2.6 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
SUMMER CAMP IS A GROWING INDUSTRY. Many people have fond memories of sleep-away summer camps that feature hiking, canoeing, swimming and campfire songs. Others remember camp as a place where they learned about music, theater, dance, horseback riding, creative writing, environmental education or other activities.
After stalling during the pandemic, camp is once again a growing industry. A 2023 study conducted by the University of Michigan Economic Growth Institute and the American Camp Association (ACA) found, “camp contributes $70 billion to the national economy directly and through ripple effects, including via business-to-business purchases and labor income.”10
About 26 million kids—more than 30 percent of school-age children in the United States—go to summer camp. As a result, day camps and overnight camps have become an important aspect of children’s education and growth reported Kira Garcia of Bloomberg.11
“Today’s entrepreneurial camp directors are thinking beyond canoes and lakeside cabins,” wrote Garcia. “Want your kid to work on DJ skills, robotics or scuba diving? There’s a camp for that! Specialty programs were the industry’s fastest-growing segment prior to the COVID-19 pandemic and are predicted to be in increasingly high demand from 2023 to 2028.”11
Camp is also important for parents. When the school year ends, working parents are left without structured supervision for school-age children. The struggle to juggle work, home and parenting responsibilities can be intense. Camp offers a way for children to refuel and reset, while participating in stimulating activities, reported Alex Frost in Success.12
One issue for many families is cost. While the average cost of camp varies widely, the average cost is $87 per day, reported Nancy Chen of CBS News.13 The ACA reports there are ways to reduce or manage the cost of camp, including:14
- Applying for a camp scholarship,
- Taking advantage of early registration discounts,
- Choosing a structured payment plan,
- Spending funds in a Dependent Care Flexible Spending Account, and
- Receiving the Child and Dependent Care Tax Credit.
If you’re looking for a present for a younger person, gifting a summer camp experience may be a good choice.
Weekly Focus – Think About It
“To this day, I fondly recall the challenges of building a fire, pitching a tent, climbing a New England mountain, canoeing on a lake. Camp songs still resonate inside me. Nobody fails summer camp, a nice respite from winters of fortune and misfortune at school.”15―Michael Eisner, Disney CEO
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.barrons.com/articles/stock-market-complacency-violent-volatility-12691013?mod=hp_LEAD_1_B_2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Barrons_How%20the%20Stock%20Market%20Went%20from%20Complacency%20to%20Volatility%20and%20Back_1.pdf)
2 https://www.bls.gov/news.release/cpi.nr0.htm
4 https://www.barrons.com/livecoverage/cpi-inflation-july-report-data-today (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Barrons_Inflation%20Falls%20Below%203%25%20for%20First%20Time%20Since%202021_4.pdf)
5 https://www.census.gov/retail/marts/www/marts_current.pdf
6 https://www.bloomberg.com/news/articles/2024-08-14/asian-stocks-to-open-weaker-cpi-calms-wall-street-markets-wrap (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Bloomberg_Stocks%20Rally%20as%20Data%20Show%20US%20Economy%20is%20Holding%20Up_6.pdf)
7 http://www.sca.isr.umich.edu
8 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Barrons_Data_8.pdf)
11 https://www.success.com/working-parents-summer-break/
12 https://www.cbsnews.com/news/summer-camp-soaring-heres-some-tips-for-parents-on-how-to-save-money/
[1]3 https://www.bloomberg.com/news/features/2023-06-01/niches-such-as-soccer-and-arts-make-summer-camp-a-3-5-billion-business (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/08-19-2024_Bloomberg_How%20Summer%20Camp%20Became%20a%20$3.5%20Billion%20Industry_13.pdf)
[1]4 https://www.acacamps.org/parents-families/planning-camp/preparing-camp/how-afford-camp [1]5https://www.summercamps.com/summer-camp-quotes/